Investment Policy Statement
I am grateful for LivingaFI for prompting me to write down my own Investment Policy Statement (IPS). My IPS is below. I’ll set out the thinking behind it in more detail in separate blog posts (starting here).
|Funds and accounts||
- Apr 19. Reducing the fixed income and leverage target slightly; Equity tweaked down to 93% but FI down from 22 to 20, and leverage down from -17 to -13.
- July 2018. Sale of two large assets has resulted in a change. UK equities down from 33% to 25%. Cash/(loan) target down from -25% to -17%; EUR are currently cheapest to borrow (1.2%) and USD is becoming expensive (>3%) so my loan is now spread accordingly. International equities up to 20%, Oz equities up to 5%. UK fixed income down to 9% and US fixed income down to 8%.
- October 2017. Net margin down by 10%, all by a USD change; I am now targeting my net loan to be only 25% of my portfolio (down from 35%). Equities and fixed income long positions reduced slightly (fixed income down more).
- January 2017. U.K. Equity down weighted, U.K. Loan reduced, USA equity increased, USA loan reduced, USA and U.K. Fixed income reduced. Broadly this reduces home bias in line with the November accidental / involuntary shift that occurred when I rationalised my private banking portfolio. It also reflected reduced leverage due to significant equity gains in 2016, coupled with the fact that one of my margin loan accounts is GBP-only.
- July 2016. UK Fixed income downweighted, US loan target reduced; slight shift towards equity along with a slight reduction in leverage.
- January 2016. Major rethink, caused by the Dream Home purchase and the portfolio loan used to buy it. Shift towards lower risk, less UK-facing mix; UK downweighted (in case of Brexit), fixed income upweighted (for stability).
- April 2015. USA upweighted, UK downweighted (in frustration at paucity of attractive investments in UK). Geographic split 55/25/14/6. Asset split 80/15/5. Round numbers; fixed income jitters.
- Early 2014. Australia mildly upweighted (reasons forgotten). Geographic split 60/20/14/6. Asset split 79/15/6. Fixed income jitters.
- Late 2012. Original allocation. Geographic split 60/20/15/5; asset split 77/19/4.
Any comments or suggestions very welcome.